7 ms·

Facebook loses 3 more executives

93 points by chrisacky 14y ago

bceagle 14y ago
I think that it is inevitable execs and talented developers will leave an organization at some point because there is only so much value you can get by sticking around indefinitely. The issue here is the timing of when they are leaving. You can't ignore the signals that Zuckerberg is in way over his head. He did a great job getting the company to this point but perhaps the next major departure/reassignment is his. It is not unprecedented to have the board of a public company replace the founder with a more experience CEO and that is what it seems like is needed in this case.
- colinplamondon 14y ago
  Because their stock has dropped?
  - Spooky23 14y ago
    The departure of key execs who aren't the beneficiaries of a big windfall is seen as a bearish indicator for the future of the stock price. That doesn't necessarily mean anything with respect to the long term prospects for the company. Also, are these folks key execs? No idea.
- taligent 14y ago
  You do know that Zuckerberg has majority voting stock right ? So it doesn't matter whether the board thinks he should be replaced. He will be CEO until he is either sick of the job or unwell. But either it will be at his choosing. And people need to remember that there is a lot of very rich people at Facebook now. It wouldn't surprise me if we see a lot more people resigning to create their own startups or buy an island.
  - pnathan 14y ago
    I seem to recall that Microsoft minted millionares as well in the '90s. Did they have an outflow of the rich too? (I don't know).
    - mikeryan 14y ago
      I think there's always a risk of an outflow of people once their stock options hit. That being said, the article actually makes the point that for two of these departures they may be leaving not because of hitting it in the SV lottery but because they're not going to see a payout because their options were priced in at an overly high valuation. Facebook may get hit from both ends, those who have been there 3-4 years ago may be cashing out, those that joined in the last 1-2 years may be leaving because they won't see any return on their options.
    - drumdance 14y ago
      Microsoft's market cap grew slowly compared to Facebook, so even if you joined the company 5 years after the IPO there was still a lot of headroom in the stock. But once it hit $200 billion (or whatever they top end was), potential new hires started wondering what the upside was. It's not likely to become a trillion dollar company, so you're looking at a max multiple of 4-5. But back when it was at $20 billion it was a little easier to drink the koolaid and imagine a higher multiple.
  - mtgx 14y ago
    I think now more than ever Mark would want to maintain it's majority share, otherwise the board might start considering replacing him if things keep going downhill from here.
  - bceagle 14y ago
    Sorry, I actually wasn't thinking of the board forcing Zuckerberg to step down. I was more thinking about the Google situation where Schmidt took over CEO for a couple years while Larry Page hung around doing something else.
- SkyMarshal 14y ago
  >You can't ignore the signals that Zuckerberg is in way over his head. Yeah, you can. You can chalk them up to statistical noise resulting from a few engineering and business model problems that need to be solved, which shouldn't be surprising in the relatively early days of a unique new business model like Facebook. Just ignore the Silicon Valley and Wall Street news industry echo chamber, their fundamental business model is about turning statistical noise into ad impressions and cash flow. This too will pass. >He did a great job getting the company to this point but perhaps the next major departure/reassignment is his. It is not unprecedented to have the board of a public company replace the founder with a more experience CEO and that is what it seems like is needed in this case. As pointed out above, Zuck owns a controlling interest, so this won't happen. But more importantly, there no CEO alive with more experience in this domain than Zuck. Who are you thinking of, Tom the Myspace founder? An ex-Yahoo CEO? There's still no one better than Zuck for this, so even if he could be replaced it would be foolish to do so.
  - viscanti 14y ago
    By most accounts Sheryl Sandberg is handling most of the traditional CEO duties. Zuck has the benefit of being a founder CEO, with an experienced exec in Sandberg to help. Any issues Facebook faces, won't be because Zuck is in over his head. The problem that Zuck (and Facebook at large) face is that there's a rift between expectations (100 Billion+ valuation) vs reality (it's a profitable, but much smaller business). Facebook needs to either change their belief (or expectations) or reality (somehow morph into a 100 Billion+ company). Neither is easy to do, but now that Facebook is a public company, they've at least got a chance. Market forces can help guide them to a realistic valuation, and given enough time as a profitable but lower valued company, it's possible they'll reset their expectations to something more realistic. Or they could finally pull the rabbit out of the hat and become a 100+ billion dollar company.
  - corin_ 14y ago
    I'm not saying Zuckerberg should be replaced - I don't know nearly enough to even have an opinion, yet alone one that I think is correct, and if I did think he should be replaced I'd have no idea who would be a good replacement. However I disagree with "There's still no one better than Zuck for this". You were right that nobody has has much experience in specifically this area, however that doesn't mean there is nobody who could do his job better. It just means there's nobody who you can glance at and say "based on the headlines in their CV, they clearly have more practice doing this and their past results look good". An incredibly over the top example of my point: If tomorrow Zuckerberg introduced a company policy of "no black staff, no black facebook members" I would definitely argue there are people who could do his job better based on that one policy alone. However the question of "most experience" would not have gained a new answer overnight.
mtgx 14y ago
Are these the same sort of people that quit their other companies a year before the IPO for Facebook stock?
joelandren 14y ago
Remember when "Executives" were C-Level or at least SVPs? I'm not saying anything about these particular folks, just noting that the tech press tends to overuse the term executive.
- laconian 14y ago
  The tech press loves bloodshed, just like the regular press.
s_henry_paulson 14y ago
I wonder what a "mobile marketing manager" for Facebook does, seeing as how they don't have any mobile advertising. 99% of mobile downloads are from people searching their respective app stores for "Facebook" and clicking download. Easiest job ever?
- webwright 14y ago
  You're misunderstanding the breadth of what marketing is at Facebook (and most modern consumer software companies). It certainly isn't "if we aren't getting downloads, go buy some ads". It's about increasing the rate of acquisition (inbound and outbound marketing), improving activation (signup to active user), increasing the rate of sharing (viral), increasing the rate of conversions from sharing, internationalization, etc. Check: https://www.google.com/search?q=facebook+growth+team https://www.google.com/search?q=facebook+growth+team
samstave 14y ago
Whomever took the google deals to stay at google must be so happy with their choice given the poor performance of FB.
- danielweber 14y ago
  If I could have taken a job at Facebook five years ago, I would have. I'd still have made out like a bandit despite their recent troubles.
  - vtry 14y ago
    No you would have not, lockup for employee is in November. Might be below $5 a share by then.
    - danielweber 14y ago
      There was a private market before the IPO.
      - vtry 14y ago
        He would not have sold it, nor would he have joined facebook 5 years ago.
    - smackfu 14y ago
      Prices are meaningless without knowing what the option grant price was. Or if someone got 10,000 shares, $5 is still just fine.
      - sadga 14y ago
        $50K over 5 years, not so much. 100,000 shares, maybe.
spdy 14y ago
As expected. Many people have and will leave Facebook. They came to cash-out thats what they did after the IPO. And now they are off to new ventures. Same has happend and will happen to all big hits who go IPO. You will lose a lot of talent. Maybe this was one of the reasons they pushed out the IPO date so many times. Golden Handcuffs are good sometimes.
- drumdance 14y ago
  I thought they were locked up until 6 months after the IPO?
  - cjrp 14y ago
    3 months for some people: http://blogs.marketwatch.com/thetell/2012/05/17/facebook-shortens-lock-up-period-for-some-holders/ http://blogs.marketwatch.com/thetell/2012/05/17/facebook-sho... Also, once your options have vested, nothing to stop you leaving before the lock-up expires.
weezer 14y ago
It's relevant that they can sell their shares after they leave, but if they continue working at FB they have to wait a few more weeks to months for the lock-up period to expire. Maybe they're scared about the stock and want to prevent further losses.
- rowborg 14y ago
  Just curious, why do you say this? Most lockups are structured in such a way that they are binding whether or not you continue to be employed by the company. Your shares can only be sold via the company stock plan manager (often the underwriter) and they will enforce the agreement. Is there any reason you believe FB's lockup is structured differently?
  - nerd-on-bay 14y ago
    First: I know nothing about facebook lockups. There is a intersecting web of securities law and the terms of the original share sales to private investors. Here is some information about registration rights and investment term sheets: http://www.avvo.com/legal-guides/ugc/venture-capital-term-sheet-registration-rights http://www.avvo.com/legal-guides/ugc/venture-capital-term-sh...
- nerd-on-bay 14y ago
  Many corporate employment agreements have two stock sale requirements of note: 1. You can only trade during certain "windows" per quarter. The rest are all blacked-out dates - for example leading up to earnings announcements. 2. Under some employment contracts, you may not benefit from any trading strategy that is contingent on the stock falling in value. In other words, you cannot short nor directly hedge against the stock of your own company. Specifically what this means is that an executive couldn't short, buy puts, buy a cashless collar, or any direct hedging strategy unless they leave the company. Leaving the company has its own issues: 1. You may leave large unvested options and/or RSUs on the table. This is very hard and nearly impossible for most people to stomach. Golden handcuffs. 2. If you do leave, you are still not free and clear to do as you please with your stock. If your stock is unregistered, you must ask the company and its investor team, legal team, transfer agent, and often the SEC for authorization to deposit the stock into a trading account. Finally, for any significant equity position, there are significant tax consequences to each strategy. Read about people being underwater on taxes after exercising ISOs during the dotcom bubble. tl;dr Seek professional advice.
hxf148 14y ago
It's a boon of new money and fresh funded interests to the community. Better for everyone but I would not have gone public. (limited actual knowledge of real world pressures.. but still. They were not in control and give up more. It is not your thing if it's everyone's thing and when everyone is bored of their thing. Well...
programminggeek 14y ago
Keep in mind, this is also a great time to leave FB, there is a talent crunch in the tech world and sometimes the easiest way to advance your career is to go to another company. If your goal is to be a CEO, you will never get there by staying at FB.
pixie_ 14y ago
Good. Less management, more engineers. Facebook is profitable, and Zuckerberg has 56% voting stake in the company, so screw everyone else. I say let Mark do whatever he and his engineering team want to do, and don't bow down to people who would rather make a quick buck than build a great company.
- shashashasha 14y ago
  So you're saying that no one will fill these roles?

93 points by chrisacky 14y ago

I think that it is inevitable execs and talented developers will leave an organization at some point because there is only so much value you can get by sticking around indefinitely. The issue here is the timing of when they are leaving. You can't ignore the signals that Zuckerberg is in way over his head. He did a great job getting the company to this point but perhaps the next major departure/reassignment is his. It is not unprecedented to have the board of a public company replace the founder with a more experience CEO and that is what it seems like is needed in this case.

colinplamondon 14y ago
Because their stock has dropped?
- Spooky23 14y ago
  The departure of key execs who aren't the beneficiaries of a big windfall is seen as a bearish indicator for the future of the stock price. That doesn't necessarily mean anything with respect to the long term prospects for the company. Also, are these folks key execs? No idea.
taligent 14y ago
You do know that Zuckerberg has majority voting stock right ? So it doesn't matter whether the board thinks he should be replaced. He will be CEO until he is either sick of the job or unwell. But either it will be at his choosing. And people need to remember that there is a lot of very rich people at Facebook now. It wouldn't surprise me if we see a lot more people resigning to create their own startups or buy an island.
- pnathan 14y ago
  I seem to recall that Microsoft minted millionares as well in the '90s. Did they have an outflow of the rich too? (I don't know).
  - mikeryan 14y ago
    I think there's always a risk of an outflow of people once their stock options hit. That being said, the article actually makes the point that for two of these departures they may be leaving not because of hitting it in the SV lottery but because they're not going to see a payout because their options were priced in at an overly high valuation. Facebook may get hit from both ends, those who have been there 3-4 years ago may be cashing out, those that joined in the last 1-2 years may be leaving because they won't see any return on their options.
  - drumdance 14y ago
    Microsoft's market cap grew slowly compared to Facebook, so even if you joined the company 5 years after the IPO there was still a lot of headroom in the stock. But once it hit $200 billion (or whatever they top end was), potential new hires started wondering what the upside was. It's not likely to become a trillion dollar company, so you're looking at a max multiple of 4-5. But back when it was at $20 billion it was a little easier to drink the koolaid and imagine a higher multiple.
- mtgx 14y ago
  I think now more than ever Mark would want to maintain it's majority share, otherwise the board might start considering replacing him if things keep going downhill from here.
- bceagle 14y ago
  Sorry, I actually wasn't thinking of the board forcing Zuckerberg to step down. I was more thinking about the Google situation where Schmidt took over CEO for a couple years while Larry Page hung around doing something else.
SkyMarshal 14y ago
>You can't ignore the signals that Zuckerberg is in way over his head. Yeah, you can. You can chalk them up to statistical noise resulting from a few engineering and business model problems that need to be solved, which shouldn't be surprising in the relatively early days of a unique new business model like Facebook. Just ignore the Silicon Valley and Wall Street news industry echo chamber, their fundamental business model is about turning statistical noise into ad impressions and cash flow. This too will pass. >He did a great job getting the company to this point but perhaps the next major departure/reassignment is his. It is not unprecedented to have the board of a public company replace the founder with a more experience CEO and that is what it seems like is needed in this case. As pointed out above, Zuck owns a controlling interest, so this won't happen. But more importantly, there no CEO alive with more experience in this domain than Zuck. Who are you thinking of, Tom the Myspace founder? An ex-Yahoo CEO? There's still no one better than Zuck for this, so even if he could be replaced it would be foolish to do so.
- viscanti 14y ago
  By most accounts Sheryl Sandberg is handling most of the traditional CEO duties. Zuck has the benefit of being a founder CEO, with an experienced exec in Sandberg to help. Any issues Facebook faces, won't be because Zuck is in over his head. The problem that Zuck (and Facebook at large) face is that there's a rift between expectations (100 Billion+ valuation) vs reality (it's a profitable, but much smaller business). Facebook needs to either change their belief (or expectations) or reality (somehow morph into a 100 Billion+ company). Neither is easy to do, but now that Facebook is a public company, they've at least got a chance. Market forces can help guide them to a realistic valuation, and given enough time as a profitable but lower valued company, it's possible they'll reset their expectations to something more realistic. Or they could finally pull the rabbit out of the hat and become a 100+ billion dollar company.
- corin_ 14y ago
  I'm not saying Zuckerberg should be replaced - I don't know nearly enough to even have an opinion, yet alone one that I think is correct, and if I did think he should be replaced I'd have no idea who would be a good replacement. However I disagree with "There's still no one better than Zuck for this". You were right that nobody has has much experience in specifically this area, however that doesn't mean there is nobody who could do his job better. It just means there's nobody who you can glance at and say "based on the headlines in their CV, they clearly have more practice doing this and their past results look good". An incredibly over the top example of my point: If tomorrow Zuckerberg introduced a company policy of "no black staff, no black facebook members" I would definitely argue there are people who could do his job better based on that one policy alone. However the question of "most experience" would not have gained a new answer overnight.

mtgx 14y ago

Are these the same sort of people that quit their other companies a year before the IPO for Facebook stock?

joelandren 14y ago

Remember when "Executives" were C-Level or at least SVPs? I'm not saying anything about these particular folks, just noting that the tech press tends to overuse the term executive.

laconian 14y ago
The tech press loves bloodshed, just like the regular press.

s_henry_paulson 14y ago

I wonder what a "mobile marketing manager" for Facebook does, seeing as how they don't have any mobile advertising. 99% of mobile downloads are from people searching their respective app stores for "Facebook" and clicking download. Easiest job ever?

webwright 14y ago
You're misunderstanding the breadth of what marketing is at Facebook (and most modern consumer software companies). It certainly isn't "if we aren't getting downloads, go buy some ads". It's about increasing the rate of acquisition (inbound and outbound marketing), improving activation (signup to active user), increasing the rate of sharing (viral), increasing the rate of conversions from sharing, internationalization, etc. Check: https://www.google.com/search?q=facebook+growth+team https://www.google.com/search?q=facebook+growth+team

samstave 14y ago

Whomever took the google deals to stay at google must be so happy with their choice given the poor performance of FB.

danielweber 14y ago
If I could have taken a job at Facebook five years ago, I would have. I'd still have made out like a bandit despite their recent troubles.
- vtry 14y ago
  No you would have not, lockup for employee is in November. Might be below $5 a share by then.
  - danielweber 14y ago
    There was a private market before the IPO.
    - vtry 14y ago
      He would not have sold it, nor would he have joined facebook 5 years ago.
  - smackfu 14y ago
    Prices are meaningless without knowing what the option grant price was. Or if someone got 10,000 shares, $5 is still just fine.
    - sadga 14y ago
      $50K over 5 years, not so much. 100,000 shares, maybe.

spdy 14y ago

As expected. Many people have and will leave Facebook. They came to cash-out thats what they did after the IPO. And now they are off to new ventures. Same has happend and will happen to all big hits who go IPO. You will lose a lot of talent. Maybe this was one of the reasons they pushed out the IPO date so many times. Golden Handcuffs are good sometimes.

drumdance 14y ago
I thought they were locked up until 6 months after the IPO?
- cjrp 14y ago
  3 months for some people: http://blogs.marketwatch.com/thetell/2012/05/17/facebook-shortens-lock-up-period-for-some-holders/ http://blogs.marketwatch.com/thetell/2012/05/17/facebook-sho... Also, once your options have vested, nothing to stop you leaving before the lock-up expires.

weezer 14y ago

It's relevant that they can sell their shares after they leave, but if they continue working at FB they have to wait a few more weeks to months for the lock-up period to expire. Maybe they're scared about the stock and want to prevent further losses.

rowborg 14y ago
Just curious, why do you say this? Most lockups are structured in such a way that they are binding whether or not you continue to be employed by the company. Your shares can only be sold via the company stock plan manager (often the underwriter) and they will enforce the agreement. Is there any reason you believe FB's lockup is structured differently?
- nerd-on-bay 14y ago
  First: I know nothing about facebook lockups. There is a intersecting web of securities law and the terms of the original share sales to private investors. Here is some information about registration rights and investment term sheets: http://www.avvo.com/legal-guides/ugc/venture-capital-term-sheet-registration-rights http://www.avvo.com/legal-guides/ugc/venture-capital-term-sh...
nerd-on-bay 14y ago
Many corporate employment agreements have two stock sale requirements of note: 1. You can only trade during certain "windows" per quarter. The rest are all blacked-out dates - for example leading up to earnings announcements. 2. Under some employment contracts, you may not benefit from any trading strategy that is contingent on the stock falling in value. In other words, you cannot short nor directly hedge against the stock of your own company. Specifically what this means is that an executive couldn't short, buy puts, buy a cashless collar, or any direct hedging strategy unless they leave the company. Leaving the company has its own issues: 1. You may leave large unvested options and/or RSUs on the table. This is very hard and nearly impossible for most people to stomach. Golden handcuffs. 2. If you do leave, you are still not free and clear to do as you please with your stock. If your stock is unregistered, you must ask the company and its investor team, legal team, transfer agent, and often the SEC for authorization to deposit the stock into a trading account. Finally, for any significant equity position, there are significant tax consequences to each strategy. Read about people being underwater on taxes after exercising ISOs during the dotcom bubble. tl;dr Seek professional advice.

hxf148 14y ago

It's a boon of new money and fresh funded interests to the community. Better for everyone but I would not have gone public. (limited actual knowledge of real world pressures.. but still. They were not in control and give up more. It is not your thing if it's everyone's thing and when everyone is bored of their thing. Well...

programminggeek 14y ago

Keep in mind, this is also a great time to leave FB, there is a talent crunch in the tech world and sometimes the easiest way to advance your career is to go to another company. If your goal is to be a CEO, you will never get there by staying at FB.

pixie_ 14y ago

Good. Less management, more engineers. Facebook is profitable, and Zuckerberg has 56% voting stake in the company, so screw everyone else. I say let Mark do whatever he and his engineering team want to do, and don't bow down to people who would rather make a quick buck than build a great company.

shashashasha 14y ago
So you're saying that no one will fill these roles?